Ongoing political and economic uncertainty amid the war in Iran drove the UK economy into contraction in April, the latest ONS figures show.
Monthly GDP contracted for the first time since August 2025, down by 0.1% in April, following growths of 0.3% in March and 0.4% in February.
However, the quarterly picture tells a more encouraging story. GDP grew by 0.7% in the three months to April, following growth of 0.6% Q1 and 0.5% in the three months to February. April's quarterly growth was largely driven by a resilient services sector and a construction industry that has seen consecutive months of growth following a period of contraction.
Industry experts said that some monthly contraction was inevitable after stronger-than-expected growth in March, noting that April's dip was in line with expectations.
As a result, and amid continued quarterly growth, many expect the Bank of England to adopt a 'wait and see' approach to interest rates at its meeting next week.
Luke Bartholomew, deputy chief economist at Aberdeen, said: “After March’s surprisingly strong GDP data, some pullback in April was always likely. And the series is very volatile month to month. But the 0.1% contraction in April is consistent with other data which suggest the economy slowing sharply going into Q2 and that recession risks are elevated. That economic weakness helps explain why the Bank of England is very unlikely to follow the ECB’s decision to hike at its meeting next week, and we expect rates to remain on hold for the rest of the year. But it may be that UK economic data has more of a backseat role for the time being, with investors probably more focussed on both geopolitics around the potential for an Iran deal, and domestic politics around the fate of the prime minister.”
Samuel Fuller, director of Financial Markets Online, commented: “The UK’s surprisingly benign GDP figures mean the Bank of England’s Monetary Policy Committee will be fighting one fire, not two, when it meets next week.
“The economy shrank by 0.1% in April compared to March, bang on expectation. The first monthly contraction since last August was unwelcome but also unremarkable - a fall in real GDP had been largely priced in by the markets.
“But zoom out and things look far healthier. Quarterly growth continued to accelerate and the economy was 1.2% bigger in April than it was in the same month last year.
“April was the second month of the Iran war, and much of the downturn can be ascribed to battered consumer confidence and soaring fuel prices.
“Despite April’s negative headline figure, the data does not show an economy going into hibernation. This will afford the Bank of England’s ratesetters more freedom to focus on inflation, rather than failing growth.
“As a result the stakes for next Wednesday’s CPI data have risen sharply. If it comes in as hot as feared, the Bank could raise the UK’s base rate as early as Thursday.
“That would hurt the 1.8 million people due to remortgage this year and may slow growth further, but the Bank may decide to follow the ECB’s lead in raising rates early in order to see off a greater danger - the risk of inflation becoming entrenched.”
Kevin Brown, savings expert at Scottish Friendly, added: "While GDP fell on a monthly basis in April for the first time since the end of last summer, the quarterly picture tells a more encouraging story.
"The economy actually grew 0.7% in the three months to April, driven by a resilient services sector and a construction industry that has now strung together consecutive months of growth following a period of contraction.
"Despite this, the economy is facing considerable headwinds, the most serious of which is the conflict in the Middle East, which is acting as a chokepoint in the global economy that is pushing up energy prices, disrupting supply chains and spooking policymakers.
"Yesterday, the European Central Bank became the first G7 central bank to raise rates in response, citing inflationary pressures stemming from the Middle East conflict. That decision will not have gone unnoticed on Threadneedle Street.
"Even so, we expect the Bank of England's Monetary Policy Committee to hold rates when it meets next week. UK inflation remains above the 2% target but has not spiralled because of the conflict, while the economy is holding up relatively well, all things considered. Increasing rates would act as an anchor on the economy and a fragile labour market."
